Ebay forces sellers to accept payments from buyers through PayPal. In the United States, PayPal is licensed as a money transmitter only on a state-by-state basis. Basically, it's a middleman with no access to funds in the real banks.The biggest challenge for PayPal is an unsustainable business model. Initially, PayPal offered its service with lower cost, planning to earn interest on funds in users' PayPal accounts (i.e., the "float").However, most recipients withdrew their funds immediately. Furthermore, a large majority of senders funded their payments using credit cards, which cost PayPal roughly 2% of payment value, rather than relying on much less with business accounts qualified for seller protection against losses due to chargebacks, provided that they complied with reimbursement policies..In August 2002, Craig Comb and two others filed a class action against PayPal in, Craig Comb, et al. v. PayPal, Inc.. They sued, alleging illegal misappropriation of customer accounts and detailed ghastly customer service experiences. Allegations included freezing deposited funds for up to 180 days until disputes were resolved by PayPalThe court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law," noting their unjustifiable one-sidedness and explicit prohibition of class actions produces results that "shock the conscience" and indicate PayPal was "attempting to insulate itself contractually from any meaningful challenge to its alleged practices"Just for fun? Grab a cup of coffee. Google PayPal lawsuits.
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Ebay forces sellers to accept payments from buyers through PayPal. In the United States, PayPal is licensed as a money transmitter only on a state-by-state basis. Basically, it's a middleman with no access to funds in the real banks.
The biggest challenge for PayPal is an unsustainable business model. Initially, PayPal offered its service with lower cost, planning to earn interest on funds in users' PayPal accounts (i.e., the "float").
However, most recipients withdrew their funds immediately. Furthermore, a large majority of senders funded their payments using credit cards, which cost PayPal roughly 2% of payment value, rather than relying on much less with business accounts qualified for seller protection against losses due to chargebacks, provided that they complied with reimbursement policies..
In August 2002, Craig Comb and two others filed a class action against PayPal in, Craig Comb, et al. v. PayPal, Inc.. They sued, alleging illegal misappropriation of customer accounts and detailed ghastly customer service experiences. Allegations included freezing deposited funds for up to 180 days until disputes were resolved by PayPal
The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law," noting their unjustifiable one-sidedness and explicit prohibition of class actions produces results that "shock the conscience" and indicate PayPal was "attempting to insulate itself contractually from any meaningful challenge to its alleged practices"
Just for fun? Grab a cup of coffee. Google PayPal lawsuits.

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